Japan Lower House election - Dec 14, 2014

[Simfan34]

Of course the real agenda is to try to get a mandate before Abe has to make hard decisions which could be unpopular.   Like restarting the nuclear power plants (I was in Japan back in Aug 2014 and they have a real power issue) or an reinterpretation of the constitution to allow for the use of the Japanese military for collective defense.

Well then good luck to him.

I saw a link saying that Japanese companies were still hoarding cash even with higher inflation rates :/

The Japanese sector is very skeptical and risk averse given so many false starts at reform.  Hording cash reflects this concern is really an example of Ricardian equivalence as it will act to negate the stimulus efforts of Japanese officials.  These elections will be seen as another trick will make the Japanese private sector even more skeptical and risk averse.  They pretty much think at some time in the future it will be time to pay the piper with massive tax increase, mostly on capital to sort out this current fiscal and economic imbalance.  Why invest in capital when it will get taxed massively in the future.  So the solution is to horde cash.

This is a self defeating-policy though, isn't it? By failing to invest the economy only stagnates further, expanding the imbalance and making it more likely that they government will levy confiscatory taxes to get to the money and spend it; I'm not sure what sort of policy there is to correct that beyond openly threatening to tax uninvested capital stock if individuals continue sitting on it.Some sort of wealth tax on assets held in savings accounts?Of course if the Japanese are as risk averse as they seem to be this could just backfire and they'd just put the money under their beds, so to speak.

That, and I don't know enough to say if there really is this hoarded cash the people are sitting in that could get them out of this mess- some people seem to think that's not the case; the Japanese are getting older and are drawing on their savings more argues one economist, which seems logical to me. It does seem all too simple- if only the Japanese would have more children and would invest more of their money, their economy would fix itself.

[jaichind]

This is a self defeating-policy though, isn't it? By failing to invest the economy only stagnates further, expanding the imbalance and making it more likely that they government will levy confiscatory taxes to get to the money and spend it; I'm not sure what sort of policy there is to correct that beyond openly threatening to tax uninvested capital stock if individuals continue sitting on it. Some sort of wealth tax on assets held in savings accounts? Of course if the Japanese are as risk averse as they seem to be this could just backfire and they'd just put the money under their beds, so to speak.

All this heterodoxy makes me feel icky.

I thought about this problem as well.  One way, is like you say, threaten a wealth tax.  Krugman's solution is to threaten monetization of the public debt which in turn incentive economic actors to spend.  My preferred solution is some monetization of the debt plus a radical labor market reform which will lead to one off surge in unemployment but will lead the proper pricing of labor and cutting out the dead wood at the enterprise level.  Of course if heterodoxy  is the way out then I think Japan is not radical enough in the sense you should go all the way with heterodoxy.  One heterodox solution I can think of is instead doing QE version X, just give every adult resident in Japan a $8000 gift debit card which would expire in 3 month as opposed to $700 billion in EQ every year.  The cost is the same.  And if need so do the same thing next year as well.  I think that will be more effective than QE.  I do not like the solution but I actually think it is better than QE.  I still like my supply side solution as the orthodox way of doing things but I say, if you are going to try something heterodox go all the way.

[jaichind]

It is sad what happen to YP.  That is pretty much the only party in Japan I like.  The managed to survive the Abe wave of 2012 and come back from near irrelevance in 2013 to get a respectable vote share in the 2013 upper house election.   What really what did YP in was not an split over policy but an issue over long term vision of the party in terms of identity.  It seem that Watanabe always planned for YP to re-merge YP back in the LDP in the future as the Watanabe faction, where as other true free market reformers that joined YP felt that LDP is not capable of playing a role of a true economic center-right party.  As a result a split could not be avoided ending in the destruction of the party.  At this stage I see no reason why Watanabe should even bother forming a new party.  He should just re-join LDP.  I guess the reason he does not is because of various anti-Watanabe currents inside the LDP that are working against him.   Watanabe actually was fairly close to Abe back in 2006-7 when was still in the LDP.

[Simfan34]

According to the World Bank, gross savings have fallen from 33% in 1989 to 19% in 2012; if this chart on Google (of WB data) is accurate then Japan has fallen below virtually all of the other economies in the region. They'd be an above-average Western European nation, but that's hardly comforting.

I can't easily find data on the past two years, but if their household savings rate is any indicator of the general trajectory things have not been getting better. This would suggest that there is less room for any kind of policy to "mobilise savings" to have a significant effect.

Even more alarming is that the gap between GDP and potential GDP was -1.165 % in 2013, compared to an OECD average of -3.051 %. According this paper review, GDP will exceed potential GDP by 2015. Things do seem to point to Japan hitting constraints rather than it underperforming; there would need to be (either way, but in this case far more crucially) major macro-structural reforms if things are to change.

The most obvious thing would be boosting birth rates by all means possible, but increasing per-capita output is a necessity; increasing the participation of women in the workforce, restarting nuclear power plants, and a whole other host of strategies are going to be needed, and to his credit Abe has been doing that.

But the issue of declining innovation (as evidenced by the declining market share of Japanese firms) is going to have to be addressed, and the shinsotsu culture ought to be target No. 1, but I don't know how much, if anything, Abe's done in that regard. The Koreans have done quite a bit to eradicate their version of it, and I'd say the chaebols are more influential there than the keiretsu are in Japan, so it should be possible (in theory).

[jaichind]

Even though the DPJ was completely caught by surprise by this election and most likely will not gain as much as they could have if they were better prepared,  they should see this election as good news.  This election will once again establish DPJ as the only viable alternative to LDP.  Other possible rivals in the opposition space have all imploded.  YP is mostly gone, JRP split into JIP which is lacking credibility due to the split of JRP and the PFG which despite its name is mostly seen as a party of old men and has-beens.  JCP gained strength but that will only highlight DPJ as the only mainstream alternative.  I have always stated that the way for DPJ to win is to lead an non-JCP opposition alliance and lure JCP voters fed up with LDP rule to vote tactically for DPJ in FPTP districts.  While that will not take place in 2014, DPJ did set itself up for a revival for the next election when the entire Abe experiment which is already losing some shine will dull and disappointment even more.  

[EPG]

Japanese working-age population is collapsing. They are now losing about a million people per year from the 15-64 age category. This must be discouraging companies from investing domestically, while also increasing fear about the future (probably helpful to Abe). It also pushes more people onto fixed incomes which are hurt by inflation. Japan is so different to any other advanced economy, with mighty government debt financed by banks and extremely low unemployment (currently below 4%; below 6% since the last millennium), probably propped up by the massive annual fiscal stimulus.

This matters for politics because there is no party coming out with alternatives to Abenomics, which is partly why I do not expect LDP to lose much. Abe seems to have consolidated support among nationalists so they have little reason to reject him, nor does he have much need to appeal to liberals (who don't typically like Abenomics anyway). Really, the LDP does need to do very badly before a Japanese majority favours the opposition, and that is reflected at the moment in the polarisation of parties which could have formed an anti-LDP coalition had they kept united front.

[Vega]

Shame the DPJ and YP couldn't officially merge. I think the general "opposition" will gain from their dissolution.

Also, Ozawa is only 72. I foresee him being around for at least another decade. Though he'll probably merge back into the DPJ at some point. He himself is a junk bond quickly depreciating.

[jaichind]

Latest Kyodo poll says 63% don’t understand reasons for Japanese Prime Minister Shinzo Abe’s call to dissolve parliament with 31% of respondents said they understood the reasons.  A majority of respondents, or 51.4%, said they want to see a more balanced political landscape between the ruling and opposition parties.

In PR vote Kyodo found support to be

LDP        25.3%
DPJ          9.4%
NKP         4.6%
JCP          4.2%
JIP           3.1%
SDP         0.9%
PLP          0.3%
PNG         0.1%
Last time around Kyodo was pretty accurate in terms of the relative gaps between parties. Back in 2013 a Kyodo poll for PR vote

LDP            30.6%
DPJ              7.4%
NKP             7.0%
JRP              4.9%
YP                3.3%
JCP               3.8%

and it ended up being

LDP            34.7%
DPJ             13.4%
NKP            14.2%
JRP             11.9%
YP                8.9%
JCP               9.7%  

If so, based on this poll we can expected LDP to get around 30% and NKP 12% in the PR vote which would actually be a positive swing from 2012 when LDP-NKP got around 40%.  But in the 300 FPTP district seats it seems that the anti-LDP vote, unlike in 2012 and 2013, will concentrate more around DPJ leading to loss of seats for LDP-NKP there.  How many depends on quality of DPJ candidates and ability for DPJ to coordinate with JIP and SDP/PLP.  Another factor will be if JIP really goes after NKP in Kinki region.  Back in 2012 JRP and NKP actually had a tactical alliance in the FTTP of Kinki where NKP is also fairly strong.  This time around JIP might go after NKP hurting NKP in the Kinki region.

[jaichind]

As for PFG, for me it is just a current version of Sunrise Party (SP) which managed 2% in the PR vote for the 2010 upper house elections.  I expect it to do about the same time time around.  At this stage running in FPTP seats, the PFG will merely hurt LDP by taking some of the nationalist vote away from LDP.

[jaichind]

It has been announced. The election will take place Sunday 12/14.  I will be on a business trip the week before to London but should be back in time to watch the results as they come in.  I hate to have to stuck in the plane while the results come out but we will see.

[jaichind]

2 YP MPs join DPJ.  I expect more to follow soon.  From a game theory point of view it makes sense for most of the YP MP to join DPJ.  LDP wont take them over their own candidate, PFG has poor prospects for them to run to win reelection, JIP is a choice but their support has dropped so it depends on where the YP MPs are located.  I suspect YP MPs in Kinki will go with JIP but there is the problem that JIP will mostly have candidates ready already and not be able to accommodate these new defectors.  So when it is all said and done, DPJ is the only game in town that has a high enough level of support in enough places to give these YP MPs a fighting chance.

[Vega]

The Japanese love weekend elections... and I do too.

Glad to see some of the YP MPs make the jump to the DPJ.

[jaichind]

Looks like Makiko Tanaka will not run even though the DPJ chapter of Niigata picked her as the DPJ candidate.  This is the end of an era of the great Tanaka political dynasty in Niigata.  I always had great respect for Makiko Tanaka and her father and former PM Kakuei Tanaka.  

On the flip side, another daughter of a former LDP PM Yuko Obuchi daughter of former PM Keizō Obuchi will run.  She was made the Trade Minister recently in the Abe cabinet as part of his womenconomics offensive.  She had to step down a few days alter due to allegations her support groups misused political funds.  Based on what I know about Japanese political culture, these allegations will have zero impact on her ability to get reelected.  

[Vega]

I hope NHK will provide results in English like they did in 2012. Too bad they took down the page like a day after election day.

[jaichind]

I hope NHK will provide results in English like they did in 2012. Too bad they took down the page like a day after election day.

I have the advantage of knowing Kanji because it is pretty much just Chinese.  So any Japanese results website I can understand 80% it and then I can figure out the rest.  These English website for NHK will have results but it will be delayed relative to the Japanese language one and have much less rich data (like were the outstanding results are and regional distribution) which will be very useful to project what the final results will be.  It would be like giving you vote count in a US election without telling you which counties report and how much.

[Vega]

I hope NHK will provide results in English like they did in 2012. Too bad they took down the page like a day after election day.

I have the advantage of knowing Kanji because it is pretty much just Chinese.  So any Japanese results website I can understand 80% it and then I can figure out the rest.  These English website for NHK will have results but it will be delayed relative to the Japanese language one and have much less rich data (like were the outstanding results are and regional distribution) which will be very useful to project what the final results will be.  It would be like giving you vote count in a US election without telling you which counties report and how much.

Alright. So I guess we'll be on the Asahi Shimbun? Or do you have another favorite?

[jaichind]

I hope NHK will provide results in English like they did in 2012. Too bad they took down the page like a day after election day.

I have the advantage of knowing Kanji because it is pretty much just Chinese.  So any Japanese results website I can understand 80% it and then I can figure out the rest.  These English website for NHK will have results but it will be delayed relative to the Japanese language one and have much less rich data (like were the outstanding results are and regional distribution) which will be very useful to project what the final results will be.  It would be like giving you vote count in a US election without telling you which counties report and how much.

Alright. So I guess we'll be on the Asahi Shimbun? Or do you have another favorite?

I always go with NHK during the count.  As the count is over I think sites like Asahi Shimbun will have richer data but they tend to be not as good as NHK during the count.  I am not aware that Asahi Shimbun has an English results site.  I guess I never looked since I just jump to the Japanese language site.  Actually reading Japanese election sites made me learn more about the history of the Chinese language.  The way the Japanese use certain Chinese characters in terms of meaning has diverged over the last 1300 years when Kanji was introduced to Japan from the Chinese Tang dynasty.  There are many Chinese characters whose meaning has changed over time and some I know for a fact had a certain meaning several hundreds of years ago but has since changed fairly recently.  I noticed that in many cases the Japanese also uses said character with the new meaning as well.  This means the Chinese must have re-imported the Japanese use in the last 100 years.  I think the level of Chinese re-importation of Japanese uses of Kanji in the last 100 years is quite underestimated.      

[jaichind]

I have been thinking about what should the DPJ election strategy be to maximize the LDP-NKP loss.  I think it should be

1) Make sure DPJ locks down New Party Daichi in Hokkaido.  Hokkaido used to be a DPJ stronghold but the breakup of the DPJ alliance with NPD doomed it to a massive defeat in 2012.  YP had some strength in Hokkaido so its breakup gives DPJ chances to absorb that vote.   
2) Lock up an alliance if not outright merger with PLP.  The PLP vote base is the same as DPJ so a merger will prevent a split of the vote.
3) Focus and dump resources in Tokyo.  Tokyo was won by LDP-NKP by narrow margins in many districts in 2012 and a less splintered opposition should help DPJ.  Tokyo is very elastic and often votes for the latest political fad.  JRP got a lot of votes in 2012 as the new political fad but now that is faded.  DPJ has to work to capture that vote. 
4) Form tactical alliances with JIP in Kinki region to prevent a JIP alliance with NKP like in 2012. Offer to support JIP in most districts in Kinki in return for JIP support in places like Hokkaido and JIP taking a junior role in Tokyo.
5) Form tactical alliances with SDP to prevent split of the vote.
6) Present DPJ as the alternative to LDP-NKP to attract JCP tactical voting in the district vote.

I think if the DPJ can do these 6 things well, I can see LDP-NKP gaining 2-3 seats in the PR section but lose 30+ seats in the FPTP which would put the DPJ in a good position for the next general election and do some damage to the Abe brand.

[jaichind]

BTW, this election there will be 295 FPTP seats and 180 PR seats as opposed to 300 FPTP seats and 180 PR seats.  The reduction of 5 FPTP seats is the first step in redistricting as to gave equal votes across Japan in terms of the population of east constituency.  All 5 reductions are from prefectures that are dominated by LDP except for Yamanashi prefecture where the DPJ does have some presence as has 1 of the 3 seats currently in that prefecture.  So now 3 incumbents of which 1 is from DPJ will have to fight it out.  Net net this change means most likely a net loss to LDP of 4-5 seats just from the start.

[DC Al Fine]

Just curious, who do you support Jachind? Your Party?

[World politics is up Schmitt creek]

Just curious, who do you support Jachind? Your Party?

Your Party recently ceased to exist.

[Filuwaúrdjan]

Yes, the average lifespan of a personality cult who's personality is destroyed by scandal is not long.

[jaichind]

Just curious, who do you support Jachind? Your Party?

Correct.  But YP is gone now.  If I had to pick I guess I prefer DPJ.  Only because I really object to Abe's JPY depreciation and QE policy. 

[jaichind]

Asahi Shimbun poll.

Approval/Disapproval of Abe cabinet 39/40
PR Vote

LDP  37%
DPJ  13%
JIP     9%
JCP    6%
NKP   4%
SDP   1%
PLP    0%
PFG   0%

We can now establish that PFG, which is most likely underrated due to the shy Japanese nationalist, is mostly a dud which will end up with 2% of the vote or something. 

Asahi which is center-left and most likely pro-DPJ tends to overrate LDP and underrate NKP in its polls for some unknown reason.  Typically the way I read (or unskew) Asahi polls is to add up support in Asahi polls for LDP-NKP and that is what LDP-NKP will end up getting overall.  Then, for Asahi polls one tends to double the vote share for DPJ and that will be what DPJ will end up with.  So an unskewed interpretation of this poll will be around LDP-NKP at 41% and DPJ at 26%.  This is not too far off from my reading of the Kyodo poll.

[Famous Mortimer]

Two People's Life MPs, including the party's secretary general, defect to the DPJ.